The Markets in Financial Instruments Directive 2004/39/EC (MiFID) first appeared in 2007 with the goal of regulating investment services and enhancing consumer protection across Europe. In 2011, the European Commission began revising MiFID — ultimately arriving at MiFID II, which didn’t actually arrive in the form of implementation until January of this year. A lot of marketing and content around MiFID II takes a “shock and awe” approach about how different it is; this is largely to convince you that you need to be worried and hopefully buy a product or service that will solve said worry. Don’t get us wrong — we want you to not be worried, and we want you to work with us on said lack of worry — but we’ll also admit this upfront: MiFID II isn’t that much different from the original MiFID.
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What is different, though?
List of specific minimum requirements: Regulation 40(5) of MiFID II requires firms to retain details on transactions based on a list of minimum records required.
More supervision: MiFID II mentions that NCA will use company records to ensure firms are complying with their obligations.
Required capture of all conversation types and stages: MIFID II rules require firms to keep all communications that may lead up to a trade in the future - including instant messages and social media conversations.
The medium: Records must be kept in a durable medium allowing for replaying, but which prevents the record from being manipulated or altered. The records also need to be readily accessible and available upon request.
Records of telephone and electronic conversations: Firms must keep all records of these communications for up to 7 years — and ensure that electronic communications and telephone calls on both privately owned and firm issued equipment, internally and externally are being retained, for permanent and contracting staff.
Does this change the marketplace?
In many ways, yes. At essence this is about more robust data reporting and social media/communication capture — organizations are going to be pushed towards greater compliance in these areas. If you have the right framework, process, and structure in place -- you’ll be fine. If you don’t, buckle up because it’s going to get a little roller coaster-ish pretty soon. Expect revenue erosion and more.
Don't worry, we can help
If you're concerned about MiFID II compliance, or just need a quick check to make sure your practices are up to date, Hanzo is here to help. Schedule a call with one of our compliance experts today to get a handle on your content before the regulators come around.
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